ISLAMABAD: Services trade plunged into a deficit of $740.38m in the first quarter (July-September) of this fiscal year, compared with a surplus of $148.75m in the same quarter last fiscal year.

Export of services declined sharply by 49.33 per cent to $1.102 billion in the quarter under review from $2.176bn in the corresponding period last year, suggested data of Pakistan Bureau of Statistics. The fall is mainly driven by decrease in exports of government services.

In comparison, year-on-year import of services dropped by 9.10pc to $1.843bn in the quarter from $2.027bn.

On monthly basis, the exports grew by 10.49pc in September 2013 compared to the same month last year. This rebound in export of services growth may be witnessed in the coming months.

The exports include government services, remittances received by foreign missions in Pakistan, receipts through international bodies, earnings of Pakistan diplomatic mission abroad, and other government services.

The biggest share in government services exports came from military units and agencies, followed by transportation sector.

In the travel sectors, earnings came from tourist of Pakistani origin and from the foreign national tourist and religious tours.

Others include export of postal services, and courier services, telecommunications, construction services, computer and information services, hardware consultancy services software consultancy, export of other businesses services, royalties and licence fees, personal, culture and recreation services, audiovisual and related services, earnings of professional artists and other personal, cult and recreational services.

Export of services was $6.618bn in FY13 compared with $5.035bn in FY12. This hike in exports was mainly driven by travel, construction, insurance, computer and information services, and government and businesses services.As for imports, the services which posted a fall include transportation, travel, communications, insurance services, financial services, computer and information services and other business services during the first quarter of FY14.

In FY13, services imports fell to $7.758bn compared with $8.227bn in FY12.

Pakistan has been negotiating a plurilateral agreement on trade in services to get market access for its services providers and exporters.

The services sector has emerged as the main driver of economic growth. Its share has increased from 56pc of the gross domestic product (GDP) in 2005-06 to 57.7pc in 2012-13.

Major sub-sectors are finance and insurance, transport and storage, wholesale and retail trade, public administration and defence.

Pakistan has opened up its market to foreign services providers, particularly in banking, insurance, telecommunications, retail and some other sectors.

Pakistan’s share in global trade in services stood at less than 0.06pc in FY13, while its share in the domestic GDP posted a substantial increase.

Experts say the low share of the country’s share in global trade is because that most of the services produced are non-tradable.

They also identified many barriers in the services trade, including regulatory barriers, discriminatory requirements, economic need tests, non-national treatment, non-MFN treatment, imperfect market structure and prudential supervision.